South Australia’s electricity system was put the test over the long weekend when the state’s only baseload power contributor, the brown coal Northern power station near Augusta, suddenly tripped and stopped providing power.

The incident was caused by a fire that caused several injuries, including one serious injury to a worker still in hospital. This is not the first time that South Australia has been without baseload coal power, of course. Northern was mothballed for nearly a year because of the declining economics of the coal generator. The difference with this event is that it came unannounced.

While declines and increases in the output of wind and solar are quite predictable, sudden outages in baseload fossil fuels are not, which is why the energy system needs a large amount of redundancy to support large centralised generation.

So how did the South Australian energy market cope? Quite well, as it turns out. There was a lot of wind blowing at the time, so it was a while before the Torrens gas plant was needed. Most of the gas came from the Osborne plant.

There was so much wind – more than 1GW through most of the day – that electricity prices dived into negative territory on several occasions during the day, which means that the gas generators were not making any money.

Indeed, for most of the day South Australia had the cheapest wholesale electricity prices in the country.

It was only when the output of wind declined, and the working week began on Tuesday (Monday was a national holiday), that wholesale energy prices started to jump as the more expensive gas generators began to set the marginal cost of generation – something that would likely have happened on Sunday without the impact of wind.

This is a scenario that has been repeatedly played out in summer months, when the state’s large rooftop solar output has also kept prices in check. As it happened, because of the lousy weather than generated the wind, there was comparatively little output from solar.

Later on Tuesday, as the output of wind dropped to around 500MW, those prices jumped to more than $550/MWh, and were averaging during the day at more than $150/MWh.

It underlines the point that the chief qualities of the energy system of the future will not be baseload, but flexibility. This will likely be delivered by the quick-start gas generators that already exist in the system to back up fossil fuels, but also the grid and household-based storage that will be installed in coming years.

Both are likely to be installed by utilities, households and retailers because they offer a cheaper alternative to upgrading grids. Morgan Stanley recently suggested that deployment of battery storage could negate the need for much of the gas-fired peaking plant currently needed to respond to heat wave conditions and provide power when baseload power stations cut out.

(Norte: This article has been corrected to note that prices in South Australia jumped to around $550MWh on Tuesday, not $11,000MWh as first reported.

Giles Parkinson is founder and editor of RenewEconomy.com.au, and is also the founder of OneStepOffTheGrid.com.au and founder/editor of www.TheDriven.io. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

Giles Parkinson is founder and editor of RenewEconomy.com.au, and is also the founder of OneStepOffTheGrid.com.au and founder/editor of www.TheDriven.io. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

23 Comments

In 2012 when we looked at renewable energy we saw all the problems it caused to the status quo. The variations in wind and sun and zero storage created stability problems.
In 2015 we can see the synergy of renewable and the status quo is doing ok. In fact we look ahead and the things about renewanles that seemed to be problems in 2012 will be huge benifits as we inhale the new technologies including storage on the load side.
In 2018 it will become obvious that the big fossil fuel gens are the cause of the biggest most expensive problems.

Mongo 3 years ago

“In fact we look ahead and the things about renewanles that seemed to be problems in 2012 will be huge benifits as we inhale the new technologies including storage on the load side.”

What gridscale storage would that be? Here the states most of the best pumped storage sites have been developed and Australia is flat as a pancake (tho there are new, very expensive subterranean storage schemes etc on the drawing board). I think a lot of this renewables enthusiasm is taxpayer slushfunded government buffoonery, not commercially practicable otherwise. Load/frequency control with high grid renewables incursion is a real b____. Just ask Hawaiian Electric, currently the test case for the entire planet.

Cooma Doug 4 years ago

Looking at the last parragraph of the article..it is already the case that the summer peak has shifted well away from 240pm. It kicks in around 430 and is a significant change. Load side battery will move the peak from 430 I expect. It will be a mere blimp if there at all in a few years

I agree with your main conclusion – that flexibility of response (whether it be on the supply side or demand side) will become increasingly valuable as the aggregate size of intermittent capacity continues to increase over time.

What I am puzzling about is what this will do to patterns of pricing – certainly more esoteric discussions about the pros and cons of resolving the 5/30 issue will play into how effective that fast response can be:

For your readers, the attached NEM-Watch snapshot here shows an update to what you have posted above, highlighting how liquid fueled plant also gained a run tonight with the higher prices with wind declining:

PS you commented “Later on Tuesday, as the output of wind dropped to around 500MW, those prices jumped to more than $11,000/MWh”. As shown in NEM-Watch, the highest the SA dispatch price reached today (at least thus far) was $589.50/MWh

David K Clarke 4 years ago

The first graph shows small, but significant solar PV on Monday, but none on Saturday or Sunday?

See my chart from NEM-Watch below (same app as what Giles used for 1st chart) and how I have annotated to say that, unfortunately, APVi have only given us permission at this stage to include 24 hours history.

The chart does note that (see below) but unfortunately Giles has been a bit overzealous with the scissors and hence the note was removed in his chart above 🙂 !

Hi. So, hopefully these graphs will prove useful. Shows Sunday’s solar share, and as part of overall demand. So it was roughly comparable with Monday – cloudy weather reducing output. Saturday was higher at the midday hours. The from the APVI solar map. (they don’t graph multiple days as far as i can tell)

David K Clarke 4 years ago

Thanks for that

Robert Johnston 4 years ago

I preface the following comment with I’m a strong supporter of renewable energy – so here goes – I’m baffled why there is this focus on spot prices in the SA market and the impact of wind in driving the price negative – reality is very little electricity is truly traded in the spot market, particularly in SA – its a fundamental misunderstanding of the market to state that the gas generators made no money because the reality is they did because they have contracts for that energy at prices that are not the spot price. The same goes for wind, with ALL wind in SA contracted at prices well above the spot price on this particular day (plus LGC value) and the retailers passing those contracted costs (not the spot price) on to retail customers, there are very few actually exposed to the SA spot market – its almost irrelevant… C’mon Giles, you understand the market better than this article suggests….

C’mon Robert. You know that quite a few of those wind plants are “merchant” so rely on the spot price. Just look at annual accounts of Infigen to understand that. Ditto for coal generators – that’s why generator Stanwell blames solar for pushing down wholesale prices and pushing it to a loss. Yes, a lot is contracted, but the spot market plays a critical role. Particularly on peaking and intermediate gas plants, which don’t run if they can help it without high spot prices. Why else are they pushing for capacity mechanisms?

JonathanMaddox 4 years ago

If this information is available, it would be good to read actual prices paid for different blocks of power, and the fraction of demand which does trade at spot prices. I guess if supply contracts are drawn up privately between generators, utilities and big consumers then the prices would not necessarily be published in a central location.

frostyoz 4 years ago

A large scheduled power station will usually contract forward for around n-1 of their available units, so that their contracts are covered in the case of an unscheduled unit outage. If the station has 4 units, that means up to 25% can be available at spot prices, subject to the demand being there for it. Typically less than 10% of power sold into the spot market from scheduled units is uncontracted.

Most wind farms are fully contracted for at least the first 15 years of their life, which reduces their financing costs.

Roll over the “MWh” link on that page, and you will see that the exchange-traded volume is about double the actual physical volume.

JonathanMaddox 4 years ago

So only a fraction of the physically generated electricity is immediately traded on the exchange by the producers, but the total traded volume on the exchange is much *greater* than the total generated? Interesting.

If a unit can be traded more than once, I dare say many of those units which are bought from the generators on forward contracts are *also* subsequently traded on the exchange by whoever bought them. Would I be right?

frostyoz 4 years ago

Several major reasons for why contracted quantities (derivatives) are multiples of the underlying physical quantity:

1 different types of contract – the quantity might be first traded as an option, and the option exercised into another contract;

2 some intermediaries buy and sell as traders, giving liquidity to the market, hoping to buy low and sell higher, without ever having a physical position at the end;

3 some buy forward early as a hedge, then sell later what they don’t need (because their expected physical position changes between time of trade and time of supply). Or vice versa.

Stanwell in SA? Which windfarms exactly are Merchant in SA Giles? (That would be one crazy asset owner, so yes Infigen is a candidate!). Capacity payment seeking peakers etc is more to do with the fact that “caps” aren’t really worth anything these days in most markets due to reduced market volatility on the upside (yes renewables have contributed to this by changing the supply demand balance – more so than the fact their SRMC is less than fossil fuel generators – along with falling demand and other factors) than getting paid to run (which is the opposite of how capacity payments work). Don’t forget that windfarms go broke if they generate at less than their LRMC in the same way that fossil fuel generators do….

Ian 4 years ago

A year ago on this site was an article: pumped hydro – the forgotten storage solution 2/7/2014. The capital costs were estimated at only $100 to $200 /kwh. If the networks were bright, they would concentrate their efforts on developing hydro storage. They could undercut Tesla and Panasonic etc with providing cheap electricity storage. I would say the ideal situation for South Australia would be roof top solar providing localised power generation and wind with pumped hydro providing reliability and versatility. the networks have got to see themselves as ‘electricity storage providers’, like it or not they will be competing with distributed battery storage.

Ian 4 years ago

Sorry to add this note which is slightly off topic but talking about intermittency of renewables being mitigated by storage, there is an old mine site in North Queensland that genex is very cleverly converting to pumped storage. I have another idea of a similar site someone might care to take up. The Anglesea coal mine in Victoria is perfect. It has a deep pit and currently feeds an old 150MW coal power station. Alcoa, the poor b-st-rds, are besides themselves, not knowing what to do with the site. No one wants to touch the place, dirty brown coal in an over-supplied market. But this is a gold mine – excuse the pun. This site can be converted to a clean and green pumped storage facility. The current owners would probably pay someone to take it off their hands!

One of the things that is striking me is that the graphs being shown and the discussions are fitting into the overall conversation around basing our entire social and economic stability on continuous growth.

The technology is now easily available that can see a household go off grid, grow virtually all their own food and capture their own water. Just think of the economic ramifications on business models based on consumption of these technologies.

In Australia there seems to be a very informed and insightful small group of commentators in a sea of outrageously ill informed ignorant infotainment and frankly this is acceptable, but what isn’t acceptable is that this small group has no leverage into the policies of the nation.

The public needs to deal itself back into the game for the corporates have at this stage rigged it to their advantage as is logical given their modus operandi.

The people like Giles and the group WattsClarity and others would be an ideal foundation in setting up an Association that would funnel those who want to get better informed on the energy policies of the nation through an evidence based methodical approach to what is actually happening in the market today and reduce the haze of complexity.

This association would require an demonstrable ability to understand the issues and offer people educational opportunities through 5 day courses to gain insight and understanding that they then can continue to improve as they gain more experience and familiarity with the systems and day to day running of the marketplace.

The purpose of this would be to create a well informed passionate public voice for the common good that the public could trust to go to and seek explanations on suggested policies changes and implications with the result of actually influencing outcomes.

This model would be funded by the people who want to participate and by the public themselves and the utility of its existence would be obvious in the day where corporations are making outrageous inroads into core common spaces.

We could do this across the board in education, agriculture etc and begin the macro discussions on how we transition off having at our core of society perhaps the stupidest idea of them all …infinite growth on a finite planet.

I believe we can do this, I also believe technology is not the limiting factor , it is our culture… In essence we have hard baked into our culture and business models the idea of Scarcity. What is emerging is technology informed with a holistic view that suggests we actually live in almost unlimited Abundance

But to realize this, we need places for the passions that exists within the community to be funnelled through an evidence based methodology to build the competence to vigorously debate options and arrive at outcomes that reflect the common good and then deal these options into the national debate

cheers
p.s. Giles and everyone at Renew Economy keep up the great work!